Five “tricky points” on the Public Contracts Regulations 2015

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We look at how the new regime is operating on the ground and discuss our top five list of tricky issues that seem to be generating the most interest among procurement professionals.

Three months ago, the Public Contracts Regulations 2015 (PCR 2015) were about to come into force, and we focussed on some of the key changes (as readers will know, the PCR 2015 apply from 26 February 2015, for the majority of procedures commenced on or after that date). Since then we have started to get a feel for how the PCR 2015 are operating on the ground, and the sorts of issues that are generating the most interest among practitioners. There follows the top five tricky points that seem to be cropping up repeatedly.

Tricky Issue 1: Must we use Contracts Finder for under-threshold contracts?

There is no absolute obligation in the PCR 2015 to advertise an under-threshold contract in Contracts Finder. The obligation is only triggered if an active choice is made to advertise a “contract opportunity” valued at over the de minimis threshold (note that this concept is wide enough to catch pipeline statements made in the public domain as well as public advertisements, for example, made on a public body’s website).

On the other hand, there is an absolute obligation to post an award notice on Contracts Finder, assuming that the value is over the de minimis threshold. This applies even where the contract was not originally advertised on Contracts Finder. We note that “quarterly batching” of contract award notices is not expressly permitted in the PCR 2015. Since our last update the Crown Commercial Service (CCS) has issued further guidance around the Contracts Finder obligations. We note that the Contracts Finder requirements do not apply to the procurement of clinical health services – these are excluded from the scope of the PCR 2015 until April 2016.

Tricky Issue 2: Must we provide electronic availability of procurement documents from the date of the OJEU notice? Can we change them once we have published them?

Generally speaking, yes: it is an absolute requirement of Regulation 53 to provide electronic access from the date of the OJEU notice (the feedback we are getting is that this represents a step change in previous practice, which has often been to take a sequential approach to the drafting of procurement documents). Regulations 53(3) and (4) do provide limited exemptions from the requirement to make the procurement documents electronically available, but even if these apply, the procurement documents need to be made available from the date of the OJEU notice via some alternative means.

We have also been asked on several occasions to advise on what “unrestricted and full direct access free of charge” means (this is the phrase used in Regulation 53). There is no new guidance on this but we note that the phrase exactly mirrors wording in the old directive, for which there is some (admittedly now rather old) guidance. We advise following the old guidance until anything new is published. The old guidance suggests that, although there may not be any “intermediary stage”, a simple and instant registration requirement is acceptable prior to downloading documents (although ideally it should be possible for bidders to merely view documents without any registration).

Another question we are asked a lot is how much scope there is to change the procurement documents once they have been published, particularly if this had to be done at speed in order to publish the OJEU notice in compliance with Regulation 53? Obviously the ideal would be for the procurement documents to be as complete as possible on day one (taking a common sense approach; in a negotiated process, for example, it will not be possible to disclose final terms and conditions at the beginning of the procurement). That said, Recital 81 of the new Directive and Regulation 47(3) of the PCR 2015 do contemplate the possibility of “significant changes to the procurement documents” provided the timetable is extended appropriately, so clearly some degree of change is acceptable.

However, changes to the award criteria or to core requirements would almost certainly require a new advertisement. The key test is whether the procurement is so changed by the supplementary information that it has moved outside of the scope of the original advertisement and suite of documents, such that, had they known what the procurement would eventually have looked like, suppliers other than those who bid could potentially have been interested.

Tricky Issue 3: What does a light touch regime procurement look like?

Readers will be aware that, except in relation to clinical health services procurements, the old “Part B Services” regime has been replaced by the new “Light-Touch Regime” (LTR) set out at Regulation 74 to 76 of the PCR 2015. This applies to all services listed at Schedule 3, including (non-clinical) health services. The threshold for the application of the LTR is 750,000 EUR, which the Cabinet Office have confirmed is equivalent to £625,050.

Note that under the old Part A/Part B lists of services, Part B concluded with a category called “Other Services”. This encapsulated any service not specifically mentioned anywhere else in Part A or Part B. This “Other Services” category has disappeared from Schedule 3 of the PCR 2015, so some services that would once have crept into Part B will now not be covered by the LTR and will be fully subject to the PCR 2015 and the lower thresholds for services contracts in general.

If the LTR applies there is an obligation to advertise using either an OJEU notice or PIN. Of course there is a difficulty with this as no SIMAP proformas are yet available, given that the UK has implemented the directive “early” (see guidance on Completion of Forms for guidance on how to adapt current OJEU notices in the interim period).

But, beyond advertisement, there is otherwise flexibility as to process design, provided that the general principles set out at Regulation 76 are respected: The CCS has published guidance on the design of an LTR process, available here.This suggests that you should: (a) seek tenders in response to the advert; (b) include mandatory/discretionary exclusion criteria; (c) publish award criteria and sub-criteria; (d) send award letters; and (e) hold a standstill period. Perhaps not all that “light touch” after all?

Tricky Issue 4: competitive with negotiation versus competitive dialogue?

The competitive with negotiation process is new (Regulation 29) and the Competitive Dialogue process has been altered (Regulation 30). Both now share the same lower “hurdle” to justify their use – set out at Regulation 26(4). Both are negotiated processes – how do you choose between them?

If the criteria are met, the advantages of the Competitive with Negotiation (CwN) process over Competitive Dialogue (CD) are that: 

  1. Sub-central contracting authorities (eg, Foundation Trusts, universities, local authorities) can shorten timescales by agreement with bidders (this is not available for CD).
  2. The CwN process has a “state of urgency” provision at regulation 29(10) to shorten timescales if the urgency of the requirement can be substantiated (not available for CD).
  3. The CwN process contains the flexibility to reserve the right not to negotiate and simply award on initial tenders (not available for CD).

Having said that, the CD process has one killer advantage over CwN in that, under this process, negotiation with the preferred bidder after final tenders is now permitted (provided this does not change “essential aspects” of the tender or of the procurement, including the requirements). Previously only “clarifications” were permitted at this point in a CD process.

Tricky Issue 5 – what reporting requirements are there under the PCR 2015?

The reporting requirements can be divided into two categories; the requirements set out in Regulation 84 and separately, further requirements relating to the “Lord Young” measures at Part 4 of the PCR 2015.

A Regulation 84 Report is required for all contracts awarded following a formal procurement process (including LTR contracts) but is not needed for a contract called off from a framework agreement. The content requirements are set out at Regulation 84 and, in addition to core information about the contracting authority, the contract and the bidders involved, will include:

  • Reasons why an abnormally low tender was rejected.
  • Justification for using a competitive procedure or the negotiated without notice process.
  • An explanation of why electronic communication was not used, where relevant.
  • Details of conflicts of interest and measures taken to nullify them.
  • Details of any change from the advertised process in an LTR procurement.
  • Justification for not dividing into lots (this can either be included in the procurement documents or in the Regulation 84 report).
  • Justification of decision to ask for higher contract value:turnover ratio than 1:2 (this can either be included in the procurement documents or in the Regulation 84 report).

In addition, Part 4 contains its own reporting requirements, including:

  • Reporting around compliance with Regulation 113 on payment of invoices.
  • “Reportable deviations” from the permitted selection criteria set out in the standard PQQ (see Regulations 107 and 111).
  • Below-threshold contract award information on Contracts Finder must include details on whether the contract was awarded to an SME/not for profit non-government value-driven organisation.
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